Credit card debt is bad debt--plain and simple. It's expensive and in truth this type of debt account can continue to persist forever if you continue to use the card. Yes, you could literally be in your rocking chair writing a check to your credit card company. Instead of continuing to sink your hard-earned dollars into the interest charge toilet bowl, focus on ways to reduce your credit card debt and eventually eliminate it from your life completely.
Why Are Credit Cards Bad Again?
If you need a reminder of why credit cards are bad debt to carry in most cases, this is your lucky day. For one, the way credit card interest is calculated (usually through monthly compounding) causes the interest charges to multiply faster than rabbits. This can zap thousands of dollars out of your bank account every year-- thousands in interest costs that you will never see again and do not benefit you. Also, do you even remember why you're paying off that principal (the amount you charged to the card)? If it was to purchase clothes, shoes, televisions or other items that depreciate, again that does not benefit you financially. The only possible exception to this rule is if you used the card for a sound business investment.
Highest Interest Rate First
So now that you know why you're embarking on this journey to reduce your credit card debt, you can start exploring methods. One of the most common ways to pay down your credit card debt is to order your card accounts in priority from the highest rate to the lowest. Pay all extra income you have left over after paying your other bills to the first account on your list until it's completely paid off. Then dedicate all of your extra income to the next account on the list, and so on until your debt vanishes. Make sure you continue to make minimum payments on the other credit cards that are lower on your list. Keep in mind that as you pay off those balances, you free up the minimum payments that you were making on those accounts to put toward your debt-reduction plan.
Another way to reduce your credit card debt is to use the snowball method. With this approach you focus on getting rid of the smaller debts first while continuing to make your minimum payments on the larger debts. So you'll put all of your leftover income toward the smallest credit card balance first and get rid of it as quickly as possible. Then move down the line until you're ready to tackle "the big boy"--your largest credit card balance. The idea behind this method is that you motivate yourself and get yourself rolling (like a snowball) by paying off those smaller credit card debts first. Once it's time to face the large credit card balance, you're eager to finish off strong.
No More Credit Cards
A key step you have to take, which you could find harder than paying the bills off, is to stop using these credit cards completely. Get a pair of scissors and cut them up into tiny pieces. If need be, turn your credit card cut-up session into a ceremony and invite friends over to witness it. This marks the beginning of your freedom from the bad debt monster that's been sucking your bank account dry for years--it's definitely an excuse to celebrate.